Infoworld

In the early 90's, Domino's outlets in the US called off their 30-minutes-or-free program after a woman sued the company when a harried delivery-person hit her. Media pressure to safeguard the lives of pizza delivery people soon came to India. Suddenly, pizza chains eased away from their 30-minute guarantees. Some companies moved to a 39-minute promise while others decided to forgo the concept entirely.

Domino's in India, however, stuck to its guns. It decided to make it's guarantee count while simultaneously taking the heat off delivery people. By using IT to tweak internal processes, the company took its focus on speed out of the street and into their stores. They made time -- in addition to their pizzas -- a differentiator that their competition can't beat.

Ajay Kaul talks about this journey and how, with the help of IT, Domino's introduced speed and accountability at every level.

CIO: How important is speed to Domino's USP?

Ajay Kaul: Speed is a critical component of Domino's USP. But, we relate more to 'hustle' than to 'speed'. At Domino's, we have a saying: 'Hustle inside the store, not on the road'. We employ this motto to ensure that we deliver pizzas that are hot and fresh -- in 30 minutes -- without compromising the safety of the employee who is making the delivery. We operate with 'smart hustle' and positive energy inside all our stores.

Where does technology fit in the hustle?

Technology has an important role. It ensures that once an order is taken, it gets executed within 30 minutes. Through technology, we track load time, dispatch time and delivery time. IT helps us find patterns of systematic delays in specific areas or at specific times of the day, etcetera. Then these can be looked into and corrective action can be taken to improve our service to the customer.

To do all this, we use our POS (Point Of Sale) software. The software is tailor-made for the pizza delivery business. It has been designed externally and is meant primarily for 'quick-service' restaurants with specific focus on pizzas -- 80 percent of their customers are pizza companies. Fortunately, the software dovetails into the system which we use in the US, the user-friendly one that uses a touch screen. Our aim is to scale up from our POS to the US system over the next one or two years.

What benefits has the POS software given Domino's?

It has made the order-taking process simpler and faster and has also reduced the time it takes to train new employees. Initially, we tried to use our old infrastructure with the software, but we realized that the new software required better infrastructure if it was to deliver results. Therefore, we made significant investment in improving IT infrastructure at our stores. Providing training to employees to use the POS effectively and to use all its features still remains a challenge.

How does it help you make better business decisions?

The POS software helps understand consumer behavior. It tells us their preference of crust, toppings, etcetera. It also helps us customize offers for consumers. Marketing has already started using the POS database for CRM related activities. The database also helps us identify consumers who do not come back to us after eating once. It helps us understand them better and work out a plan to bring them back.

Do you use BI to determine your toppings? How else do you use this data?

We normally study which pizzas on our menu sell better. This aids us in removing pizza combinations that are out of fashion and keep our menu simple.

We also try to keep customer information updated. And, all these processes reside on our POS system. We have a pull-push mechanism through which this data goes onto a server that facilitates high-end analytics. Then, we re-feed all this data back to the store. There are some programs that run internationally and some that run locally. This data tells us what we should offer to customers based on their past preferences and how frequently they visit us, since we now have all these parameters.

It's fairly scientific. We have millions of customers and keep track of the toppings each uses and their visit-frequency, so that we know what to offer. To my mind, we have a best-in-class system. I doubt anybody in any food service or retail food business does this as well as we do.

Managing inventory and the supply-chain is another challenge in the fast-food industry. How do you stay on top of that?

We deal in perishable items so it is importance that we procure the right quantity, at the right time or end up with wastages or contamination. With IT we can optimize procurement and dispatch of inventory to outlets spread 35 cities. To do this, we use our ERP combined with co-ordination between operations and procurement.

Inventory is centralized region-wise where the commissary (equivalent to a factory or warehouse) of particular region procures and supplies all items needed by outlets according to pre-determined dispatch plans. Outlets forward items they need to the commissary, based on which the items are procured or produced and supplied to the outlets. The inventory position is constantly monitored using ERP and the purchase and manufacture of items are based on that.

Domino's intends to ramp up to almost 500 outlets over the next three years. What challenges do you foresee?

The key challenges in the current retail boom environment are manpower and rentals. At present, we have over 5,000 employees for over 182 outlets. It indicates that over the next three years we will need to triple our manpower. This at a time when retail has just started to take wings. Attracting, recruiting and training manpower is a first key challenge.

Also the way the rentals have moved up makes the search for good locations at reasonable prices a difficult task. We have laid internal benchmarks in terms of ROI on all new stores and the increase in rentals will put considerably pressure on that.

You spent two years in Indonesia with the delivery company TNT Express. What did you learn that you use today?

Domino's is 5,000-strong company with over 180 stores in 33 cities. My stint at TNT gave me an experience of working in a diverse culture. It taught me flexibility and resilience which is useful in dealing with the diversity of cultures, religions and work practices in India.

Additionally, I also picked up good QSR (Quality System Review) practices that we utilize here. Indonesia is a few years ahead in terms of evolution of food services, thanks to the presence of QSR.

So, what kind of quality control measures does Domino's have in place?

In our kind of industry, where we have some of the most stringent food preservation norms, so we require a 'cold chain' right from the time material leaves the vendor. Until the material reaches us, it is stored under temperature-controlled conditions and even when it moves to our stores in 182 destinations.

We have stringent internal control norms that look at temperature so we have data loggers on our trucks. It's fairly intense. In our setup, the points where we need quality control continue along the chain, because temperature has to be maintained between 1 to 4 degrees Celsius. We have to meet international quality norms and about 400 managers play the quality controller role.

IT helps us get our quality reports to a central place. We are also planning to give handheld devices to all quality auditors, so that they can be on the move and still keep updated to allow them to analyze problems and find solutions. We are also planning to backend this to our vendors so they get online access to our quality reports.

In an organization like Domino's, what's the role of an IT head?

An IT head in our company should and does think like a business manager. With the kind of IT advancements that are taking place, it is integral to the job of the IT head to study how IT can enable the execution of business. In the future, IT is not only going to assist the business, but also be central to customer acquisition, retention, and loyalty.

What technologies do you plan for in the near future?

Domino's in the US has launched a pizza tracker service. We make a '30-minutes or free' offer and now if customers want to know which stage within these 30 minutes their pizza is at, we can tell them. Ten minutes after placing their order, customers will be able to know whether their pizzas are still in the oven or on the road.

In India, that service will be launched soon. All we require for that is a 100 percent seamless online connectivity. Within the next few months, our main server will have 100 this. Then customers will be able to order online, via SMS and we will be able to track their pizzas.